Jurisdictions diverge on whether and to what extent the attorney-client privilege protects from compelled disclosure a trustee’s communications with an attorney. With this uncertainty, it is imperative that attorneys representing trustees know whether their jurisdiction recognizes a privilege for attorney-trustee communications, the extent of any privilege, and emerging trends in this area.
A recent article authored by Molly S. Magee and published in the Arkansas Law Review provides a thorough overview of the attorney-client privilege as applied to attorney-trustee relationships. See Molly S. Magee, Who is the Client? Who Has the Privilege?: The Attorney Client Privilege in Trust Relationships in Arkansas, 65 Ark. L. Rev. 637 (2012). You may access the article here.
Ms. Magee concludes by offering an approach for Arkansas, but first outlines and explains the three primary approaches that state courts apply when ruling on the discoverability of attorney-trustee communications. The majority approach holds that the trust’s beneficiaries, not the trustee, are the client. Consequently, the attorney-client privilege does not protect a trustee’s communications with an attorney. The Delaware Chancery Court adopted this approach, known as the fiduciary-duty exception to the attorney-client privilege, in Riggs Nat’l Bank v. Zimmer, 355 A.2d 709 (Del. Ch. 1976).
The second, and minority, approach provides that the attorney’s client is the trustee, not the beneficiaries. In jurisdictions following this approach, the attorney-client privilege protects attorney-trustee communications from discovery by the beneficiaries.
The third approach, which Ms. Magee identifies as the intermediate approach, distinguishes between attorney-trustee communications during litigation and communications made during day-to-day trust administration. Under this approach, the privilege applies to communications made during litigation, but not during normal administration of the trust.
Ms. Magee’s article provides excellent and thorough information about the three divergent approaches for applying the attorney-client privilege to attorney-trustee communications. It is well worth the read. My thanks to the Arkansas Law Review Editorial Board for granting permission to allow access to Ms. Magee’s article in this post.